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Mortgage Income Multiples Vs Loan To Value


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#1 evictee

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Posted 09 May 2012 - 02:15 PM

After more than a decade waiting for sanity to return to the housing market I am finally staring defeat in the face and giving serious consideration making my life's first and possibly last house purchase some time in the next couple of years. In keeping with the (implied) official recommendation of successive governments I intend to borrow far in excess of my ability to repay, particularly as measured by a multiple of income, i.e. I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?

#2 TheCountOfNowhere

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Posted 09 May 2012 - 02:34 PM

After more than a decade waiting for sanity to return to the housing market I am finally staring defeat in the face and giving serious consideration making my life's first and possibly last house purchase some time in the next couple of years. In keeping with the (implied) official recommendation of successive governments I intend to borrow far in excess of my ability to repay, particularly as measured by a multiple of income, i.e. I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?

Cool That means price will crash soon,.

#3 tomandlu

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Posted 09 May 2012 - 02:38 PM

is there any level of loan to value below which the banks stop worrying about income multiples altogether?


I'd hazard a guess at around 50% - i.e. the maximum 'conceivable' drop in value... BTW I do hope you're joking...
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#4 AThirdWay

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Posted 09 May 2012 - 02:39 PM

I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?


I've never tried to disuade anyone from buying on this forum, especially if they feel comfortable with the finances, but in your case I'll make an exception. Don't do it!

#5 mfs1959

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Posted 09 May 2012 - 02:44 PM

After more than a decade waiting for sanity to return to the housing market I am finally staring defeat in the face and giving serious consideration making my life's first and possibly last house purchase some time in the next couple of years. In keeping with the (implied) official recommendation of successive governments I intend to borrow far in excess of my ability to repay, particularly as measured by a multiple of income, i.e. I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?


0%

#6 the flying pig

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Posted 09 May 2012 - 02:51 PM

After more than a decade waiting for sanity to return to the housing market I am finally staring defeat in the face and giving serious consideration making my life's first and possibly last house purchase some time in the next couple of years. In keeping with the (implied) official recommendation of successive governments I intend to borrow far in excess of my ability to repay, particularly as measured by a multiple of income, i.e. I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?


suggest you speak to an independent financial adviser.

I recently applied for a mortgage.

with perfect credit scores, a 75% deposit, regular earnings on PAYE, and minimal outgoings I was told the most I could borrow would be about 5 times joint income.

10 times would be fairly absurd, as I'm sure you're aware. a 25 yr repayment mortgage at 5% rates would be account for over 70% of your pretax income. that is a lot.

Edited by the flying pig, 09 May 2012 - 02:52 PM.

"HOUSE PRICES FALL AGAIN", Daily Express, 28th Dec 2007... "HOUSE PRICES RISING AGAIN", Daily Express, 29th Dec 2007

#7 mfs1959

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Posted 09 May 2012 - 02:55 PM

I'd hazard a guess at around 50% - i.e. the maximum 'conceivable' drop in value... BTW I do hope you're joking...


Potentially optimistic...

#8 Democorruptcy

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Posted 09 May 2012 - 03:00 PM

I was told the most I could borrow would be about 5 times joint income.


It only takes a few....
Democorruptcy
If you say "Democorruptcy" quickly, it sounds a bit like "Democracy". In a "Democracy" people vote for politicians who represent their interests. In the UK's "Democorruptcy" people can only vote for expense fiddling thieving MPs who are in the hip pocket of big business and the finance sector.

Governbankment
A "Governbankment" is a Government that has no line between itself and it's banks. The UK's Governbankment does policies to enrich bankers at the expense of the public. The more money people are encouraged to borrow, the more money bankers make.

The Funding for Lending Scheme (FLS) is stealing from savers to make them pay for crimes by bankers. Via lower interest on savings, all the bank fines for PPI, LIBOR and interest rates swaps are now being paid by savers so that bankers can keep pocketing bonuses.

"We need to make a really big change: from an economy built on debt to an economy built on savings" - David Camoron Jan 2009
"Printing money is the last resort of desperate governments when all other policies have failed" - George Osborne Jan 2009
- So what do Camoron & Osborne do? Print money and leave interest rates at 0.5% when inflation is over 5%

If it is asserted that civilization is a real advance in the condition of man -- and I think that it is, though only the wise improve their advantages -- it must be shown that it has produced better dwellings without making them more costly; and the cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run.
http://classiclit.ab...en-Part-2_4.htm

I want to tell you my secret now.... I see debt people

#9 plummet expert

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Posted 09 May 2012 - 03:39 PM

In a word, no - assuming you want to pay a reasonable (i.e. affordable) interest rate.

And let's face it, unless you're paying less than 5% then you wouldn't be bringing in enough each month to make the repayments on a 5x loan.

Right! we should not be fooled into thinking 5% mortgages are cheap either. A normal rate over 25 years might easily be 7% and higher. We have inflation locked in by QE and costs are rising around the world and the increases are becoming more pressing.

#10 easy2012

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Posted 09 May 2012 - 04:44 PM

After more than a decade waiting for sanity to return to the housing market I am finally staring defeat in the face and giving serious consideration making my life's first and possibly last house purchase some time in the next couple of years. In keeping with the (implied) official recommendation of successive governments I intend to borrow far in excess of my ability to repay, particularly as measured by a multiple of income, i.e. I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?


Have you consider buying a smaller house / a less posh area ?

Bank has a duty to ensure that you are able to pay back the loan (FSA rule)... so affordability first, LTV second.

#11 tomandlu

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Posted 09 May 2012 - 04:45 PM

Bank has a duty to ensure that you are able to pay back the loan (FSA rule)


Seriously? Since when? What happens when they fail this rule?
Buy my book "All the Way Home"

#12 winkie

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Posted 09 May 2012 - 04:52 PM

I would say the percentage deposit you put down will only make a difference to what interest rate you pay.....the amount you borrow has no relevance to the deposit amount..... the amount you borrow is dependent on your ability to repay the debt out of available disposable income....that is responsible lending/ borrowing. ;)
What you don't owe won't worry you.

Less can be more.

#13 eric pebble

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Posted 09 May 2012 - 05:00 PM

After more than a decade waiting for sanity to return to the housing market I am finally staring defeat in the face and giving serious consideration making my life's first and possibly last house purchase some time in the next couple of years. In keeping with the (implied) official recommendation of successive governments I intend to borrow far in excess of my ability to repay, particularly as measured by a multiple of income, i.e. I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?

Imho - if your mortgage is anything over a MAXIMUM of 3.5 x your REAL, NON-LIAR income --- you are fooling yourself... It is THE MAIN REASON we are where we are today...... :rolleyes:

We are living in a world completely tainted - POISONED - by the effects of LIAR LOANS - which have fraudulently inflated all local prices - and - which have forced EVERYONE ELSE in all localities/neighbourhoods to effectively take out a LIAR LOAN in order to match/keep up with their local fraudulently inflated "prices" resulting from the initial LIAR LOANS taken out...... :rolleyes:

The poison in the mud is, richly & slowly leaching out its misery on us all..... We are living with the consequences......

Edited by eric pebble, 09 May 2012 - 05:04 PM.

What the media today are still not telling us in full - for some reason the lid is being kept on the whole story:
HERE IN THE UK: THE UK SUB-PRIME CATASTROPHE - IT IS NOT ONLY IN AMERICA!! THE UK LIAR LOAN INDUSTRY - Source of FICTITIOUS "MONEY", and the principle driver of the House "Price" Pyramid/Ponzi Scam & Bubble, the "Credit Crunch" - and an unacknowledged major part of and cause of the ensuing Worldwide Financial Crash.
---------------------
The following was reported in a superb documentary in late 2003 - This is now over 10 years ago!! Since then shamefully little has been done here in the UK by journalists/broadcasters to dig down deep on this story - a vast elephant in the room: Why? If you're a serious journalist - here's your story - start investigating - it is the biggest financial scandal of all time:

THE ARTICLES BELOW ARE FROM AS FAR BACK AS 2003!!

Mortgage customers 'urged to lie' - All this was way back in 2003 by the way!!
Housebuyers are being encouraged to break the law in order to obtain huge mortgages, the BBC has discovered. Brokers, and even banking staff, have been telling buyers to lie about their incomes to get bigger and bigger loans. And these underhand tactics could also be the reason why house prices have gone on rising for so long.
CLICK HERE - http://news.bbc.co.u...ess/3222053.stm

"Could you believe that a bank would invite customers to defraud it? It may sound incredible, but that is what some of Britain's biggest mortgage lenders have in effect been doing."
CLICK HERE - http://news.bbc.co.u...ess/3478635.stm

The BBC Money Programme uncovers massive mortgage fraud [2003!]: BBC TWO's The Money Programme has revealed a huge mortgage fraud with brokers from some of Britain's biggest estate agents and financial advice groups advising customers to break the law and lie about their incomes to get massively bigger mortgages. And it shows how the illicit cash raised by this method has been pouring into the housing market, boosting prices and leaving many people risking financial ruin.
CLICK HERE http://www.bbc.co.uk..._mortgage.shtml

AND READ THIS: - http://www.housepric...howtopic=152508
-----------------------------
WATCH THE VIDEO OF THE 2003/4 DOCUMENTARY HERE: -
Click on parts 2 & 3 as you go along watching this video.
------------------------------
AND WATCH THE LATEST VIDEO OF LIAR LOANS STILL IN ACTION HERE in 2008 - http://news.sky.com/.../20080641317257

#14 Pent Up

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Posted 09 May 2012 - 05:40 PM

I would say the percentage deposit you put down will only make a difference to what interest rate you pay.....the amount you borrow has no relevance to the deposit amount..... the amount you borrow is dependent on your ability to repay the debt out of available disposable income....that is responsible lending/ borrowing. ;)


Yep, income multiples apply regardless of the LTV.
Remember that buying a house is a highly leveraged investment and can result in losses that exceed your initial deposit. Buying a house may not be suitable for everyone, so please ensure that you fully understand the risks involved.


"The time to buy is when blood is running in the streets" Baron Nathan Rothschild

#15 spyguy

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Posted 09 May 2012 - 07:16 PM

After more than a decade waiting for sanity to return to the housing market I am finally staring defeat in the face and giving serious consideration making my life's first and possibly last house purchase some time in the next couple of years. In keeping with the (implied) official recommendation of successive governments I intend to borrow far in excess of my ability to repay, particularly as measured by a multiple of income, i.e. I would be looking for a mortgage in the region of 6 to 10 times my recent average (freelancer's) salary. So my question is - is there any level of loan to value below which the banks stop worrying about income multiples altogether?


You're nuts.

LTV do not matter.
They care - at last! - about your ability to service the mortgage debt not whether you can do the financial equivalent of doing 70mpn in a Robin Reliant - i.e. wind behind you, down steep hill for 5 minutes.

You're a freelancer. You're too risky. You will struggle to get anything beyond 2 times certified income with 60% deposit. And you'll pay over the odds for it.

In general, if the cost of the mortgage payment - interest + capital - is more then 30% of your take home then you'll be classed as high-risk.




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